National Real Estate Exam (PSI)Real Estate CalculationsMedium
A buyer obtains a $240,000 loan and is charged 1.5 discount points by the lender. How much will the buyer pay for these points at closing?
- A$4,800
- B$2,400
- C$3,600
- D$3,000
Show answer & explanationAnswer & explanation
Correct answer: C. $3,600
Each discount point equals 1% of the loan amount. 1.5 points = 1.5% × $240,000 = $3,600.
Why the other options are wrong
- A. This equals 2% of the loan, too high.
- B. This equals 1% of the loan, not 1.5%.
- D. This underestimates the correct percentage applied.
Discount Points
A discount point equals 1% of the loan amount and is paid upfront to lower the interest rate.
- 1 point = 1% of loan amount
- Points are based on loan amount, not purchase price
- Multiple points are cumulative percentages
Memory trick: One point equals one percent of the loan, not the price.